A Guide To The £50,000 Route For Tier 1 Entrepreneur Start-Ups

By Zoe Bantleman - Immigration Barrister

29 May 2018

The UK Immigration Rules make provision for entrepreneurs with high growth potential businesses to apply to come to, or remain in, the UK under the Tier 1 Entrepreneur visa category, where they have received at least £50,000 in funding from a registered venture capital firm, a Department for International Trade (DIT) seed funding competition, a UK Government Department or a Devolved Government Department.

(1) UK Seed Funding Competitions – Tier 1 Entrepreneur £50,000 route

A list of competitions that have been endorsed for this purpose and can be considered for the award of points are given on the GOV.UK website as follows:

TechStars London – classes itself as the number 1 accelerator in the world, but is described by DIT as very selective, only investing in 10 companies per program location;

Oxygen Accelerator – is a 13-week intensive mentor led bootcamp, followed by 13 weeks of incubation, culminating with a series of investor days where you pitch to Angel investors, VCs and Private Equity groups for further funding. They hand-pick the very best 10 teams to work with per programme;

Seedcamp – is an early-stage miro seed investment and mentoring programme that makes investment decisions several times throughout the year based on winners of its events;

Wayra UK – integrates different initiatives of the Telefónica Group and gives direct funding and pre-acceleration services to selected start-ups;

Collider – is a B2B brand accelerator dedicated to start-ups which help brands understand, engage and sell to customers, and provides a year-long programme;

Entrepreneur First – is Europe’s leading pre-seed investor in deep technology startups. They work with the world’s most talented technical individuals and support them to build deep technology companies from scratch in London. They fund even before the team is formed or the idea is fully developed. They run a 6-month programme, and are particularly interested in founders who want to solve hard technical problems;

StartPlanet NI – is a 12-week mentor-led tech accelerator culminating in a demo day before a select guest list of global investors, with a further 24-weeks free work space, working with the Accelerator Team. Each start-up that successfully secures a place on the program will receive initial seed investment of £20,000, in return for equity sacrifice of 6%, with a further £250,000 of equity funding available for each cohort;

Property Innovation (Pi) Labs – is Europe’s first venture capital platform, investing in early stage exclusively in the proptech vertical, through a pre-seed 13-week intensive mentor led programme that accelerates the growth of property start-ups.

Founders Factory – is a corporate backed accelerator and incubator in London, set up by serial entrepreneurs Brent Hoberman (Lastminute.com, MADE.COM) and Henry Lane Fox (SmartUp, Founders Intelligence) and has strong links to Founders Forum. It offers full-time support to the start-ups, over its 6-month programme.

Deep Science Ventures – is backed by the Wellcome Trust and brings together multidisciplinary groups of scientists and engineers twice a year to support them starting highly innovative science companies. They select candidates for the programme pre-team, pre-idea and provide 6 months of funding (around £110,000 per team).

You can contact the DIT for more information in relation to seed funds and accelerator programmes at info@entrepreneurs.gov.uk.

If you have seed funding from one of the aforementioned, to make an initial application you are required to provide a letter from an authorised official of the relevant organisation, confirming the amount available to you or your business, from the seed funding competition.

Where a UK Government Department or Devolved Government Department is providing all or some of the funds specifically for the purpose of setting up or expanding a business in the UK, the funding package can be considered for the award of points. You can visit www.gov.uk for information on UK Government Departments and Devolved Government Departments.

For example, InnovateUK provides a finder that shows competitions for government-backed funding to help businesses research and develop a process, product or service; test innovation ideas; and collaborate with other organisations.

To make an initial application on the basis of funding from a UK or Devolved Government Department, you must also provide a letter from an authorised official or intermediary public body confirming it has been authorised to award funds from that Department for the specific purpose of establishing or expanding UK businesses.

(3) Venture Capital Firms – Tier 1 Entrepreneur £50,000 route

Venture capital firms must be regulated and listed as venture capital firms by the Financial Conduct Authority to be considered for the award of points. You can research the Financial Services Register to check whether a venture capital firm is registered with the Financial Conduct Authority (FCA), and that it has permission to arrange, deal in or manage investments, or to manage alternative investment funds.

The evidential requirements to rely on venture capital funds, in an initial application are much more cumbersome than the seed funding competitions or government department funding.

You will need a letter from a director, partner or fund manager of the venture capital firm. The letter must contain the following information:

Confirmation of the amount of money available to your business from the VC firm;

A statement providing detailed information on the strategy, structure and financial exposure of the fund;

A statement dealing with the rationale for the investment, and specific information about the circumstances which lead to the investment decision;

A statement confirming that the business is a genuine and credible proposition;

Confirmation that the VC firm is registered with the FCA, and that it has permission to arrange, deal in or manage investments, or to manage alternative investment funds.

You will also need a copy of the completed term sheet for investment, signed by all parties, including the company valuation, company structure, founder and investor rights, funding structure and types of security being taken. You should ask the VC firm to provide a breakdown of the technical, legal, commercial and financial due diligence conducted by them in support of the investment. Finally, an accountant must provide a letter validating the financial condition of the fund.

It is possible to apply with money from a Venture Capital firm, which has been held by you for fewer than 90 consecutive days, however, you will have to meet further requirements.

Investment Considerations

Please note that, if you hold a Tier 4 Student visa and are looking to switch to the Tier 1 Entrepreneur route, while you can apply with money held in the UK from a seed funding competition or UK Government department, your investment funds cannot include your own money, money from other third parties, or money from a UK venture capital firm.

Although you can rely on funds from more than one of the above sources in order to total the required £50,000, you may not mix your personal or other third party funds with the funding from the venture capital firms, seed funding competitions and/or UK Government Departments/Devolved Government Departments towards the £50,000. If you wish to mix the funds, you will need to invest £200,000.

The investment funds requirement can, however, be met from funding obtained from the venture capital firm(s), seed funding competitions and/or UK Government Department(s)/Devolved Government Departments that has already been invested in a business together with access to any balance of money from these sources needed to total £50,000.

You can also apply if you have already invested £50,000 through one of the above sources into a UK business. However, you must have invested the funds less than 12 months before you apply.

Contact Our Tier 1 Entrepreneur Immigration Lawyers

For advice or assistance with applying for entry clearance or leave to remain as a Tier 1 Entrepreneur under a £50,000 route contact our immigration barristers and lawyers in London on 0203 617 9173 or through our online enquiry form. For more information see our Guide to Immigration Routes Tech Startups and Digital Talent.

Expert advice & representation from immigration barristers that you can rely on.

AWARDS

to top

Richmond Chambers LLP is a limited liability partnership registered in England and Wales and authorised and regulated by the Solicitors Regulation Authority (licence number: 597974). Immigration barrister members are also regulated by the Bar Standards Board.